Uber's case for compliance

The compliance woes of Uber Technology Inc. (“Uber”) have been all over the news recently. Much has been written about Uber’s seemingly troublesome culture and myriad of compliance and ethics issues. However, the challenge with compliance is that any company can experience compliance issues at any time. After all, lack of compliance might be caused by systems, but arises at bottom from the wrongful acts of a single individual. In that sense, all companies live in glass houses – and the true test of compliance is how the collapse of the house is handled. In that regard, what Uber has done to fix itself is rather extraordinary and is a positive compliance lesson, with compliance guidance, for everyone.

Let’s examine the steps taken by Uber and its Board after a former Uber engineer published a blog on February 19, 2017 detailing allegations of harassment:

February 20, 2017 – retained former U.S. attorney Eric Holder and his firm Covington & Burling to investigate the blog’s allegations, company policy and practices, and how to make the company policies real, and produce a report with recommendations (the “Report”) .

March 1, 2017 – the Board creates a Special Committee to oversee the investigation.

June 11, 2017 – the Board adopts all of the recommendations of the Report.

June 13, 2017 – the Report is released to employees.

June 16, 2017 – the Report is sent to customers and made public.

In a period of less than four months, the Report was produced and adopted with extraordinary transparency, particularly because Uber as a privately held corporation is not subject to the same public disclosure requirements as a public company.

Rather than take a narrow view of the issues, the Report’s recommendations attacked the company’s cultural issues head on and with a broad view, including looking at root causes. Issues of culture can be among the most difficult that a Chief Compliance Officer has to tackle. The Report provides a particularly good roadmap of things to consider when tackling issues around the lack of a compliance culture.

The Report with its 47 recommendations can be found at https://newsroom.uber.com/covington-recommendations/. All of the recommendations focus on tone at the top, trust, transformation and accountability. Each of the recommendations is interesting and has positive compliance impact. Here’s a summary:

Enhanced Board oversight – Increase independence of the Board, create an Ethics & Culture Committee to enhance the culture of ethical business practices, diversity and inclusion, and hold leaders accountable through compensation practices.

Internal controls – Expand the role of the Audit Committee to include independent compliance oversight, enhance internal controls, in particular travel and entertainment policies, and use enhanced tools to track employee complaints and agreements.

Reformulate Uber’s 14 Cultural Values – Create values to reflect inclusive and positive behavior, through organizational change management with input from employees, to emphasize teamwork, respect, and inclusiveness, make leaders responsible for living the values, and eliminate those values that had been used to justify poor behavior.

Training – Mandate for senior leadership, making the subjects of the training required competencies, to include management, leadership, cultural, and control training. Also, train HR, mandate leadership training for managers and create training for employees who conduct interviews.

Improve Human Resources and the Complaint Process – Identify an owner of HR policies, require senior leadership to embrace the value of and demonstrate support for HR, establish a zero-tolerance policy for discrimination and harassment without regard to whether the employee is a high performer, enhance the complaint process by enhancing communication and establishing multiple avenues for complaints, create clear management guidelines for complaints, and adjust the structure and size of HR to increase resources.

Changes in Employee Policies and Practices – Update and consolidate policies, apply them consistently, have zero tolerance for violations; issue specific and clear guidance about workplace relationships; institute and enforce clear guidelines on alcohol and controlled substances including limiting budgets and reimbursement for alcohol; improve and publicize the transfer process; improve the performance review process by emphasizing goal-setting and continuous feedback, making the process transparent and eliminating calibration; formalize the promotion process; adopt flexible work arrangements; change the catered dinner to signal an earlier end to the work day; and apply policies and practices consistently without respect to level, tenure or past performance.

Review and Assess Compensation – Comprehensive audit of payment practices to ensure compliance with federal and state law and to ensure that compensation is set for legitimate business purposes, with significantly more support from senior management and the Board to ensure a culture of compliance.

The Report provides a detailed outline of how to handle compliance issues. Increased resources, changes to organizational structure, enhanced values, management training, enhanced policies, increased employee communications, accountability: all of these suggestions are contained in the report and are valuable compliance tools. Even if a company is not experiencing the same type of issues that Uber is, the tools in the Report are universal, a veritable toolkit for compliance officers.

Without being an apologist for the issues Uber experienced, which at face value and as reported seem to be quite serious, what they are trying to do to overcome those issues is significant, transparent, and contains broad and practical compliance guidance that is useful for all companies. The guidance is particularly helpful when working with issues of culture and organizational design, which are always challenging for compliance officers. Uber has often been seen as having a disruptive but positive technology; perhaps in the future it will be seen as having a disruptive but ultimately positive compliance culture.